Teen clothing retailer rue21 has filed for Chapter 11 bankruptcy protection for the third time in the US Bankruptcy Court in Delaware.
The retailer plans to cease operations across its 540 stores and sell its intellectual property, according to Reuters report.
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According to documents filed in the bankruptcy court, the company will proceed with “going out of business” sales over the next four to six weeks while concurrently managing the sale of its intellectual property.
The Pennsylvania-based retailer, predominantly owned by Blue Torch Capital, has reported assets and liabilities each ranging from $100m to $500m, as per Bloomberg.
The company has around 4,900 employees and is burdened with $194.4m in debt, Reuters added.
It has appointed Gordon Brothers to assist with the store closures.
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By GlobalDataRue21 has been exploring the sale of its business, but potential buyers were not prepared to offer more than what could be realised through liquidation sales.
The retailer previously filed for bankruptcy protection in 2003 and 2017, the latter resulting in the closure of 400 stores and a reduction of approximately $700m in debt.
However, the company’s recovery was hindered by a significant shift in consumer buying behaviour towards online shopping, exacerbated by the Covid-19 pandemic.
In an effort to overcome these challenges, rue21 sought additional capital in 2022, securing a $25m investment from its existing lenders, who now control 80% of the company’s equity, as stated in court documents.
At its height, rue21 operated 1,000 stores across US malls.
Last month, Express and its subsidiaries filed voluntary Chapter 11 petitions to facilitate the sale of majority of its retail stores and operations.
US-based fabric and crafts retailer Joann, along with affiliates, also initiated voluntary prepackaged Chapter 11 bankruptcy proceedings in March this year to restructure its finances.
